If you are an employer, you already know that California employment law is complex and constantly evolving. Questions surrounding employee classifications can be especially difficult, particularly when determining whether an employee qualifies as a manager or exempt employee.
Employers often ask:
- Is this employee truly a manager?
- Does the employee qualify as exempt?
- What duties must the employee perform?
- How much must the employee be paid?
- What distinguishes an exempt manager from a non-exempt employee?
Under California law, exempt employees are employees who satisfy specific legal requirements that exempt them from certain wage and hour laws, including overtime requirements and meal and rest break obligations. Exempt employees are generally paid on a salary basis and are not entitled to overtime compensation regardless of the number of hours worked in a day or week.
To qualify for an exemption, an employee typically must work in an executive, administrative, or professional capacity. Managers may qualify under the executive exemption if they satisfy the applicable legal requirements.
Generally, an executive or managerial employee must meet the following criteria:
- The employee’s duties and responsibilities primarily involve the management of the business or a customarily recognized department or subdivision;
- The employee regularly directs the work of two or more employees;
- The employee has authority to hire or terminate employees, or the employee’s recommendations regarding hiring, firing, promotion, or other changes in employment status are given particular weight;
- The employee regularly exercises discretion and independent judgment;
- The employee spends more than 50% of their working time performing exempt managerial duties; and
- The employee earns a salary that meets the minimum threshold required under California law for exempt employees.
Managerial duties that may support the executive exemption can vary depending on the industry and workplace, but commonly include:
- interviewing, hiring, and training employees;
- setting schedules and adjusting hours of work;
- directing employee work and assigning responsibilities;
- determining operational procedures and workflow;
- supervising inventory, materials, merchandise, or supplies;
- maintaining production or sales records for supervisory purposes;
- evaluating employee performance and recommending promotions or disciplinary action;
- handling employee complaints and workplace grievances;
- disciplining employees;
- ensuring workplace safety and security;
- preparing or overseeing budgets; and
- monitoring and implementing legal compliance measures.
Exemption issues are highly fact-specific and must be evaluated on a case-by-case basis. Job titles alone do not determine exempt status. Instead, courts and agencies examine the employee’s actual day-to-day duties and responsibilities.
If you have questions regarding employee classification or whether a particular employee may qualify as exempt, contact us to discuss your situation.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Readers should consult qualified legal counsel regarding their specific circumstances.
